Blockchain has been in the spotlight over the past year more than ever. The utopian vision of a global, more accessible and equitable digital financial revolution that will replace the traditional international financial system has grown exponentially. But it is this growth that has created a host of problems.
From its aggressive use of energy and carbon footprint, to the vulnerability and volatility revealed after the Luna crypto crash in May 2022 and a recent report questioning Regarding its decentralization, blockchain now faces a new set of challenges.
Can blockchain transactions be green, transparent, fair and secure? Some new blockchain startups say, “Yes.” They are pushing the cryptographic limits of new innovative algorithms that could be the future of blockchain.
Blockchain green energy problem
Global investor group reported on July 6, 2022, on the findings of new research by tech company reg CUBE. According to the report, regulators are ignoring the environmental impact of cryptocurrency mining.
CUBE has explored approximately 15,000 data points from global regulatory and issuers over the past four years. Their findings were shocking. While regulators are thinking about the big picture for cryptocurrencies, with governments and banks leading the way, discussions around crypto sustainability account for less than zero. 1% of regulated issuances.
As climate change mitigation policies become a top priority for all countries, the carbon footprint of cryptocurrencies is under increasing pressure. The Cambridge Alternative Finance Center says that bitcoin, with a total annual consumption of 145 terawatt-hours, uses more energy than Argentina, a country of more than 47 million people.
If bitcoin were a country, it would be among the top 30 energy users worldwide, BBC reported. And other cryptocurrencies are on the same path. Ethereum uses as much energy as Switzerland with about 62 million terawatt-hours consumed annually.
According to the Bitcoin Mining Council — using only voluntarily disclosed data — 57% of the energy used for cryptocurrency operations comes from renewable sources, Roland and Berger report.
New blockchain startup movement
A new movement of tech startups is developing sustainable blockchains. Some of these tokens have emotionless transactions as well as faster uptime compared to mainstream cryptocurrencies. All these startups have something in common. All agree that the key to a green, fast and decentralized blockchain is found in the algorithm.
Cardano — running an alternative to Proof-of-work (PoW) — and Nano, a peer-to-peer open-source cryptocurrency with a very low carbon footprint. Chia, BitGreen, and IOTA are also some of the big names of this new blockchain movement.
Another startup in this new trend is the HELO blockchain from NuPay Technologies. HELO claims virtually zero carbon emissions and free transaction fees. They also claim to have the fastest algorithm in the world.
TechRepublic spoke to Sarah RobertsonSVP of Activity at HELO, to understand what drives the movement and how traditional blockchain operators can flourish.
Robertson said that alternatives to the consensus algorithms used in blockchain need to be considered. Currently, and unfortunately, the blockchain is based on the Proof of Work (PoW) network. PoW models, where thousands of computers compete to solve the next “problem” and create a block, are the biggest energy consumers.
“Simply changing the consensus algorithm used to operate is not feasible, as all blockchain functions are based on this,” said Robertson. To reduce carbon emissions, the entire industry will need to switch to new systems.
Like other green crypto alternatives, the HELO blockchain uses a different consensus algorithm to keep energy consumption to a minimum. HELO calls its algorithm Proof of Ethic™.
“Proof of Ethic does not rely on performing heavy mathematical calculations for as long as possible, using expensive computer hardware,” explains Robertson.
She adds that it is combined with many other ingenious computer algorithms and mechanisms, to keep carbon emissions to a minimum.
A fair and decentralized cryptocurrency environment
A recent report commissioned by Pentagon Research Team DARPArevealed that the nodes of the blockchain are not decentralized, up-to-date, or secure.
Nodes are created by blockchain network participants. These manage, communicate and verify every transaction. In the HELO blockchain, nodes must adhere to a structured and coherent system of behavior in order to perform various actions related to the decentralized network.
The HELO blockchain algorithm is based on the principle of absolute probability equality. This means that each node or participant has an equal chance to generate the next block without investing a lot of capital. It is designed to avoid centralization and create an accessible and equal consensus.
As cryptocurrencies went global, the cryptocurrency mining sector became industrialized. Massive secretive cryptocurrency mining centers, crypto activities that are linked to criminal activities, and the use of energy from non-renewable sources become top concerns.
To solve these problems, HELO has developed an algorithm in which the speed of computation does not matter.
“Purchase of additional computer hardware will not increase a user’s chances of receiving rewards in HELO. Staking doesn’t matter, meaning additional funds held in the blockchain will not increase a user’s chances of getting a reward, Robertson said.
This new, groundbreaking and innovative approach is designed to make blockchain more decentralized, relying on all nodes participating in the network on equal levels. This means that no group of people can have more control or influence than others.
Blockchain transaction speed
Another point that users around the world are still struggling with is the possible time it takes for blockchain transactions to take place. To push a block over Bitcoin, 1 MB of data is required. This process can take two seconds or five minutes.
“For sensitive data transfers or large payments, no one wants to wait and wonder when their transaction will be complete,” HELO said.
But HELO has more than just speed complaints. They claim to have the fastest processing payment algorithm system in the world, running at around 6,250,000 transactions per second (TPS).
As a preliminary example, Bitcoin is capable of handling around 7 TPS, Ethereum is capable of 20 TPS, Solana is typically at 1,000 to 3,000 TPS, and Cardano’s Layer 2 solution — dubbed “the world’s fastest blockchain” — if implemented, theoretically around 1,000,000 TPS, Nathan TrudeauHELO’s CTO said.
“We believe this will revolutionize the industry by providing the unprecedented capability of a blockchain that users can trust,” said Robertson.
Blockchain encryption?
Blockchain, cryptocurrencies, NFTs and digital assets continue to evolve daily. This technology, now global, is out of the bag and unlikely to return to the shadows of its early days. However, from energy usage to the very algorithm that runs virtually all transactions, blockchain is far from perfect.
Can the blockchain be decrypted? Unfortunately, there is no simple answer to the question. Most components, consensus algorithms, and mechanisms of the blockchain will need to be updated.
“It’s not impossible, but it’s going to be incredibly complicated,” says Robertson.
Like most startups, the HELO community is growing slowly day by day, now reaching several thousand people. However, the first cryptocurrencies started in a similar way, with only a few thousand users.
Is this how the future of blockchain begins? Will startups developing disruptive and innovative crypto solutions go mainstream? While the answer is unknown, one thing is for sure, the idea of a greener, faster, and fairer blockchain is a compelling one.
